Tax Season

It is that time of year that brings out the worst in our pocketbook and the best in our pride.

Nothing says success like looking at your numbers for the year to find out that you made more money than you thought you would make. But that benchmark of fame brings a price tag (and a monster) that is hard to run from.

Dare I say it out loud? Canada Revenue Agency.

Filing taxes, both corporate or personal, is so easy, but getting that tax bill is a hard lump to swallow. We all have to pay our taxes, but there are some people that need to be more cautious than others.

These are the people that own businesses, especially incorporated ones.

Especially in Edmonton (or Alberta, for that matter), we have a very high amount of workers that are incorporating and forming their own business in order to work in the oilfield. The money is great, the work is good, and it feels like you have it made.

The way the corporate rules are set, the average business owner will find himself in trouble very quickly. Little known to the business owner, going into business starts a trend when they no longer are paying taxes in “real time” in their “real tax year”. They can often go 18 months without paying CRA a single penny. But when they do start to pay, the bills roll in quickly, as CRA rules dictate theypay for the last 18 months as well as prepay the next 12 months.

If you have found yourself in a situation where you have not paid your tax bill, it takes somebody professional to get you out of that situation properly. You can owe CRA money and you will pay interest. Money owing to the CRA can be negotiated. Believe it or not, the money you owe is not your biggest concern.

However, if you are not caught up, you will continue to pay penalties, making your situation even worse! Many businesses do not file their items with CRA as they know they do not have funds. However, this is the worst situation and can compound a bad situation into one that is unmanageable.

However, you get out, use a professional to work with CRA and to help you get out of your situation. The first bill to pay is your bookkeeper, and they can get you up to date, stopping the bleeding in a bad situation.